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House To Vote On One-Year US Tax Extenders Renewal

by Mike Godfrey,, Washington

04 December 2014

In a move that is now likely to receive greater support, following the failure of other more selective and longer-term proposals, the United States House of Representatives is expected to vote shortly on a bill that would approve only a one-year renewal for all of the 50-plus "tax extenders."

The outgoing Chairman of the Ways and Means Committee, Dave Camp (R – Michigan), has put together the Tax Increase Prevention Act of 2014, which takes in all of the tax provisions for individuals and businesses that expired at the end of 2013 (or during 2014) to extend them, but will only give them life until the end of this month.

In his explanation of the draft legislation, Camp pointed out that this would "prevent tax increases on millions of families and businesses as the tax year 2014 filing season begins early next year. By enacting [the bill], Congress can continue to pursue its efforts to make certain expiring tax provisions permanent to provide certainty and stability to families and businesses, without causing disruption for taxpayers trying to file their 2014 tax returns."

The provisions for individuals that expired at the end of 2013, which previously were rolled forward annually, include mortgage tax relief, the deduction for state and local sales taxes, and education tax deductions.

For businesses, the package of measures includes increased expensing under Section 179; 50 percent bonus depreciation; the work opportunity tax credit; the credit for research and development expenses; and tax breaks promoting renewable energy, such as the production tax credit that is relied upon by the wind industry.

Overall, the Joint Committee on Taxation has estimated that the Tax Increase Prevention Act of 2014 would reduce tax revenues by USD44.7bn over the ten-year period from 2015 until 2024. It replaces the previous bipartisan proposal, put forward by Camp and Senate Majority Leader Harry Reid (D – Nevada), that would also have permanently renewed selected business measures at a total ten-year unfunded cost of over USD400bn.

As an indication of the greater acceptability of the short-term fix – to get rid of the problem of the tax extenders as soon as possible during the current lame-duck congressional session – Ways and Means Committee Ranking Member Sander Levin (D – Michigan) stated that he had "actively and publicly opposed" the previous proposal "that would have given permanent tax breaks to a relative few, while costing more than USD400bn." He said: "This one-year extension avoids that damaging proposal."

In addition, President Barack Obama does not appear to be against the new short-term proposal, after US Treasury Secretary Jack Lew had called the previous package "fiscally irresponsible," and the White House had threatened a veto.

In a press briefing, the White House Press Secretary Josh Earnest noted that "there are significant fiscal consequences for just a one-year extension versus a permanent extension," and that he did not have "any new veto threats to issue."

TAGS: individuals | tax | business | sales tax | energy | law | corporation tax | tax credits | education | legislation | United States | tax breaks | revenue statistics | individual income tax | research and development | Tax

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